1. Microsimulation as a Tool in Developing
Interregional Input-Output Tables
A Case-Study of the Cairngorms National Park in Scotland –
I am Yoshifumi Ishikawa, visiting from Fuji Tokoha University in Japan.
It will be my pleasure today to show you
"A three-region interregional input-output model using a non-survey technique”
and “a case study of the economic effects of an actual public works projects
as application of the model"
Yoshifumi Ishikawa, Eveline van Leeuwen and Peter Nijkamp
Free University Amsterdam, The Netherlands

2. 1 Introduction～The purpose of this study
PLAN OF PRESENTATION
1 Introduction～The purpose of this study
2 A framework of input-output table
–A three region interregional Input-output Table-
3 The use of microsimulation for compiling the IO table
4 The application to Cairngorms national park, Scotland
5 Conclusion
I will first talk about the purpose of this study,
I explain necessity of three-region inter-regional input-output model
in particular.
Secondly, I explain three-region interregional input-output model.
I use the location quotient method as the method of estimating
inter-regional trades.
As a case study, I applied this new model to estimate the economic effects of
a new airport in Japan.
So, thirdly, I talk about the model construction and data for an analysis
of the economic effects of a case study.
And, I explain characteristics of model input
and results of measuring economic effects
Finally, I will summarize the results of this study.

3. Advantages of regional input-output table
To study interdependences among different sectors in an economy;
To identify the indirect demands concerning intermediate consumptions;
To obtain an extensive picture of important macroeconomic aggregates, such as:
production;
demand;
trade flows.

4. Some problems of regional input-output table
Most statistical offices have not provided regional input-output tables for small region.
Most regional IO tables are compiled in the form of intraregional Input-output table.
This type of table does not take into consideration
Interregional feedback effects.
Due to luck of regional specific data, It is difficult to construct regional input-output tables.
Survey, Non-survey and Hybrid approach

5. Feedback Effects among Regions
Final demand　　 △F
Region１
Region２
Intermediate
consumption
Import from
Region2
Export to
Region 1

6. To propose a three-region interregional input-output
OBJECTIVES
To propose a three-region interregional input-output
framework which covers a small region where input-
output tables is not available.
To present a new hybrid approach that combines microsimulation based on survey data with existing input-output tables.
To construct a three-region interregional input-output table for the Cairngorms national parks, Scotland and the UK
The porpose of this study are the following,
First, That is construction a three-region interregional input output model
which deal with endogenously inter-regional income distribution
and inter-regional trade.
Second,
As a case study,
I Evaluate the regional economic effect of a new airport in Japan
“Chubu international airport” using this new model.

7. Three region interregional IO Framework
Rest of the World
Region3
Region M
N12
N32
Region2 E3 M2 M3 E2
Region1
N23 E1
N31 M1
N21
N13

8. ※It is assumed that Input-Output tables for the whole
Region1
Region2
Rest of the Country (Region3)
Trade
Foreign Trade
Region"M"
Then, let's go on to the main subjects.
I explain three region interregional input-output model.
Firstly, I talk about division of regions.
When we analyze regional economic effects created
by large-scale infrastructure,
the region of interest to be measured is shown in this Figure.
That is, These regions are a small region with infrastructure,
the middle region surrounding small region,
and the area other than the middle region.
Small region is defined as region 1,middle region as Region2,
rest of country as region3.
And I define the whole region, consisting of region 1 and region 2 as region M.
It is assumed that input-output tables for the whole country and region M.
are already prepared,
but on input-output table in region 1 has not been constructed.
※It is assumed that Input-Output tables for the whole
country and region M are already prepared,
But, Input-output table for region 1 (small region) has not
been constructed.

9. Compensation of employees Gross operating surplus
Three region interregional Input-output table
Region 1
Region 2
Region 3
Export
Output
X11
X12
X13
F11
F12
F13 E1 X1
X21
X22
X23
F21
F22
F23 E2 X2
X31
X32
X33
F31
F32
F33 E3 X3
Import
MI1
MI2
MI3
Subtotal Z1 D1 D2 D3
Taxes less subsidies 1
L11
L12
L13 2
L21
L22
L23 3
L31
L32
L33
Compensation of employees
C11
C12
C13
C21
C22
C23
C31
C32
C33
Gross operating surplus S1 S2 S3
Subtotal of VA V1 V2 V3

10. Compensation of employees Gross operating surplus
Intermediate Demand
Final Demand
Export
output
Region 1
Region 2
Region 3 E X
T11A1X1
(1-N3M-MM)(1-T22)
A2X2
R1NM3A3X3
T11 f D1
(1-N3M-MM)
(1-T22) F2
R1NM3F3 E1 X1
T21A1X1
(1-N3M-MM) T22A2X2
(1-R1)NM3A3X3
T21 f D1
T22F2
(1-R1)NM3F3 E2 X2
T31A1X1
N3MA2X2
(1-NM3-M3+NM3M3)
A3X3
T31 f D1
N3M F2
(1-NM3-M3+NM3M3)F3 E3 X3
Import
M1 A1X1
MMA2X2
M3(1-NM3)
M1 f D1
MMF2
M3(1-NM3)F3
Subtotal Z1 Z2 Z3 D1 D2 D3
Tax on Products 1
G11=h11 g X1
G12 = h12G2
G13 = h13G3 2
G21=h21 g X1
G22 = h22G2
G23 = h23G3 3
G31=h31 g X1
G32 = h32G2
G33 = h33G3
Taxes less subsidies
L11=p11 l X1
L12 = p12L2
L13 =p 13L3
L21=p21 l X1
L22 = p22L2
L23 = p23L3
L31=p31 l X1
L32 = p32L2
L33 = p33L3
Compensation of employees
C11=q11 c X1
C12 = q12C2
C13 =q 13C3
C21=q21 c X1
C22 = q22C2
C23 = q23C3
C31=q31 c X1
C32 = q32C2
C33 = q33C3
Gross operating surplus
S1=V1-L1-C1
S2=V2-L2-C2
S3=V3-L3-C3
Subtotal of VA
V1=vX1
V2=vX2
V3=vX3
Output

11. Intermediate Demand
Region 1
Region 2
Region 3
T11A1X1
(1-N3M-MM)(1-T22)
A2X2
R1NM3A3X3
T21A1X1
(1-N3M-MM) T22A2X2
(1-R1)NM3A3X3
T31A1X1
N3MA2X2
(1-NM3-M3+NM3M3)
A3X3
Import
M1 A1X1
MMA2X2
M3(1-NM3)

12. Region 2 Import into Region 2 from Region 1
Rest of the Country (Region3)
Region"M"
Foreign Trade
Region2
Region1
Trade
Import into Region 2 from Region 1
Import into Region 2 from Region 2
Next, I explain the regional trading patterns of region 1 and region2
with regions other than M.
Because Region 1 and Region 2 are included in region M,
it can be assumed that the trade coefficient and import coefficient
are equivalent to the regional trade coefficient
and import coefficient of Region M.
Therefore, for region 1 and region 2 import from region3 toward
total intra regional demand are shown in each regions in these formula.
Import into Region 2 from Region 3
Import into Region 2 from foreign countries

13. Region 3 Import from Region 1 into Region 3
Rest of the Country (Region3)
Region"M"
Foreign Trade
Region2
Trade
Region1
Import from Region 1 into Region 3
Import from Region 2 into Region 3
Also, as the other trade, Export from region 1 and region 2 into region 3
means import into region3
Therefore, Export from region1 and region 2 into region3
are shown in this formula.
In addition, import from region 1 and region 2 are this formula.
Lastly, Export from region3 into region M are shown in this formula.
Import from Region 3 into Region 3
Import from foreign countries into Region 3

14. Microsimulation as a tool in simulating local trade
Region 1
Rest of the Country (Region3)
Region"M"
Foreign Trade
Region2
Region1
Trade
Import from Region 1 into Region 1
Import from Region 2 into Region 1
Microsimulation as a tool
in simulating local trade
Also, as the other trade, Export from region 1 and region 2 into region 3
means import into region3
Therefore, Export from region1 and region 2 into region3
are shown in this formula.
In addition, import from region 1 and region 2 are this formula.
Lastly, Export from region3 into region M are shown in this formula.
Import from Region 3 into Region 1
Import from foreign countries into Region 1

15. Use of Microsimulation (MSM)
MSM is a technique that focuses on individual decision makers such as persons, firms or households with the aim to develop large scale datasets.
This technique builds large-scale data sets on the attributes of individual units such as persons, households, and firms or orgagizations.
It has the ability of complementing sample data.
We can obtain precise information on a small region at low cost.

16. Procedure of constructing three region IO table
Phase 1
Preparation of IO tables for the middle region and country, and some data
Phase 2
Survey for small region (Region 1)　→Microsimulation
Phase 3
The estimation of regional trade coefficients and other coefficients
Phase 4
Compilation of the three region interregional IO table
Phase 5
Adjustment of IO table

17. Compensation of employees Gross operating surplus
Intermediate Demand
Final Demand
Export
output
Region 1
Region 2
Region 3 E X
T11A1X1
(1-N3M-MM)(1-T22)
A2X2
R1NM3A3X3
T11 f D1
(1-N3M-MM)
(1-T22) F2
R1NM3F3 E1 X1
T21A1X1
(1-N3M-MM) T22A2X2
(1-R1)NM3A3X3
T21 f D1
T22F2
(1-R1)NM3F3 E2 X2
T31A1X1
N3MA2X2
(1-NM3-M3+NM3M3)
A3X3
T31 f D1
N3M F2
(1-NM3-M3+NM3M3)F3 E3 X3
Import
M1 A1X1
MMA2X2
M3(1-NM3)
M1 f D1
MMF2
M3(1-NM3)F3
Subtotal Z1 Z2 Z3 D1 D2 D3
Tax on Products 1
G11=h11 g X1
G12 = h12G2
G13 = h13G3 2
G21=h21 g X1
G22 = h22G2
G23 = h23G3 3
G31=h31 g X1
G32 = h32G2
G33 = h33G3
Taxes less subsidies
L11=p11 l X1
L12 = p12L2
L13 =p 13L3
L21=p21 l X1
L22 = p22L2
L23 = p23L3
L31=p31 l X1
L32 = p32L2
L33 = p33L3
Compensation of employees
C11=q11 c X1
C12 = q12C2
C13 =q 13C3
C21=q21 c X1
C22 = q22C2
C23 = q23C3
C31=q31 c X1
C32 = q32C2
C33 = q33C3
Gross operating surplus
S1=V1-L1-C1
S2=V2-L2-C2
S3=V3-L3-C3
Subtotal of VA
V1=vX1
V2=vX2
V3=vX3
Output

18. A Case-Study of the Cairngorms National Park in Scotland

19. CNP 17,000 persons; 8,000 households; Several villages;
11,000 economic active persons;
1200 firms;
30% of value added from tourism.
Aim: To get a better picture of the CNP economy and to simulate effects of sustainability policies.

20. Regional division of this case-study
Rest of the World
United Kingdam
Region3
(Rest of UK)
Region M
(Scotland)
Region2
(Rest of Scotland)
Region1
(Cairngorms:CNP )
・Input-output tables have been constructed for UK and Scotland,
・The Sector number is 42

21. Microsimulation 2004 UK Symmetric IO Table (123sectors)
2007 Scotland Symmetric IO Table(126secors)
Questionnaire
Survey in CNP
Statistical data for CNP
2004 UK Symmetric IO Table (108sectors)
Microsimulation
Data for IO compilation
(Compensation of employee, Consumption expenditure by Households in CNP)
2007 UK Supply and Use Table (108 industries)
RAS Method
Regional trade
2007 UK Symmetric IO Table (108sectors)
2007 Scotland Symmetric IO Table(108secors)
The estimation of regional trade coefficients and other coefficients
Three region Interregional Symmetric IO Table (42sectors)

22. Response Only 20 firms > need to rethink our approach;
Response
Only 20 firms > need to rethink our approach;
100 households of which we know where they buy which products, where they work, income level, etc.
On average they buy 37% of all products in the park and 54% of all services.
45% of the households has at least one job in the Park.

23. 8,000 totals basic attributes
MSM to link databases
100 surveys
2,000 detailed attributes
8,000 totals basic attributes

24.
Links households
Attribute
Survey
Database
Totals
HH size x
HH income
Occupation
Job location
Years of residence
Total purchases
Products/Services
Location purchases
We will use a deterministic approach to simulate the households.

25. Direct input from own region by the demand for each industry

26. Economic effects on own region by the increase of demand for each industry

27. Economic effects of household consumption in CNP on each region
Consumption by CNP household estimated by microsimulation
Million ￡
total of CNP 59
48%
total of region2 54
44%
total of region3 11 9%
Leontief Inverse Matrix based on three region interregional IO

28. Economic effects of household consumption in CNP on each region
Economic effects of Consumption by CNP household
Million ￡
Consumption
Effects
CNP 59
48% 77
31%
Rest of Scotland 54
44%
115
46%
Rest of UK 11 9% 60
24%

29. Economic effects on CNP economy

30. Economic effects on each economy

31. CONCLUSION １． This research has developed a three-region interregional
input-output framework by dividing the whole country
into three regions with the concept of hierarchical structure
２．We proposed a new hybrid technique for compiling
a three region input-output table using microsimulation.
３．By applying this method into Cairngorms National Park,
we have investigated the economic structure in terms of
regional interdependence, and economic impacts of
consumption by household in CNP.
I will summarize the results of this study.
First, I constructed a three-region interregional input-output model
by dividing the whole country into three regions.
Also,the model was formulated as a consumption endogenous model
that adds inter-region distributed income.
Third, by applying this model into actual public works projects,
the economic effects were analyzed according to its kind of region
and industry in detail.
I found differences in economic effects in terms of region